If you, as an Australian resident entity, derive income from exporting goods or services, that income is generally subject to income tax. This is because your assessable income includes your world-wide income. If you derive income from another country, it may also be subject to tax in that country. If you have paid an amount of foreign tax in that other country, you may be entitled to a foreign income tax offset against the amount of Australian tax you are liable to pay.
Foreign income may be exempt from Australian tax in certain circumstances if you are a company and you derive your income by carrying on business at or through a permanent establishment in the other country.
The source of income is generally the place where the:
- contract is entered into in the case of goods
- services are performed in the case of services.
If you are exporting goods by selling them to a foreign resident entity on a free on board (FOB) basis in Australia, the place of contract is likely to be in Australia.
If you export to a country that has a tax treaty with Australia, the treaty may have special rules to help you determine the source of the income.
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How GST applies
GST is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia and also on most imports of goods. Generally, registered businesses include GST in the price of supplies to their customers and claim credits for the GST included in the price of their business purchases.
Exports of goods and services from Australia are generally GST-free.
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GST for small business (NAT 3014)
Exports of goods
Exported goods are GST-free if they are exported from Australia either before, or within, 60 days of the first of the following two events:
- the supplier receives any payment for the goods
- the supplier issues an invoice for the goods.
In the case of goods paid for by instalments, the payment referred to is any part of the final instalment and the invoice referred to is the invoice for the final instalment.
The supplier can apply to us to extend the 60 day period.
Special rules apply for new boats sold for private recreational use if the boat is exported from Australia within a specified 12-month period. For more information, refer to GST-free sales of new recreational boats – suppliers.
Other exports generally include supplies of things other than goods or real property for consumption outside Australia, such as services, various rights, financial supplies and other professional services.
There are specific rules that determine when such a supply is GST-free or excluded from being treated as GST-free.
Tourist refund scheme
Foreign or Australian tourists travelling from Australia are considered to be exporting if they take goods out of Australia as accompanied luggage; that is, goods that are:
- carried or worn by the traveller
- checked into the hold of the aircraft or ship that the traveller is using.
Conditions for such supplies are included in either the GST-free sealed bag system or the tourist refund scheme.
Residents of Australia’s external territories can claim refunds of GST and wine equalisation tax (WET) where applicable under the tourist refund scheme for unaccompanied goods exported from Australia back to their home territory. The rules are included in the tourist refund scheme.
If a traveller brings goods back into Australia that they have made a claim for a GST refund under TRS and the value of those goods (combined with any other overseas purchases) exceeds AUD $900, they must be declared to Australian Customs and Border Protection Services and the GST refund will have to be repaid. GST is payable on the entire value of the items, not just the amount that is over the AUD $900 limit. Penalties may apply to undeclared taxable goods.
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Registering for GST
You must register for GST in Australia if you are carrying on an enterprise, and either of the following apply:
- your GST turnover meets or exceeds the registration turnover threshold of $A75,000 (excluding GST) or $A150,000 (excluding GST) if you are a non-profit body
- you provide taxi travel as part of your business regardless of your GST turnover.
If you do not make supplies connected with Australia, or your GST turnover from supplies that are connected with Australia is less than the registration turnover threshold, you do not have to register for GST in Australia.
You can choose to register if the turnover of your enterprise is below the registration turnover threshold.
What to read/do next
The government is continually reviewing international tax arrangements. For information about how potential international legislative changes may affect you, refer to New legislation.